"We currently expect capital expenditures, excluding capital expenditures related to mobile, to be approximately $7 billion in 2019, versus $8.9 billion in 2018," Charter wrote in an earnings announcement today. "Our expectation for lower capital expenditures in 2019 versus 2018 is primarily driven by our expectation for lower customer premise equipment spend with the completion of our all-digital conversion [and] lower scalable infrastructure spend with the completion of the rollout of DOCSIS 3.1 technology across our footprint." Charter's costs are also going down because it has largely finished integrating Time Warner Cable and Bright House, after buying the cable companies in 2016.

"2019 is the year we'll see a significant reduction in capital intensity," Charter CEO Tom Rutledge said in an earnings call today, according to a Seeking Alpha transcript. A year ago, Charter executives promised investors "a meaningful decline in capital intensity" in 2019.

Charter said its cable capital spending as a percentage of cable revenue already went down, from 20.9 percent in 2017 to 20.4 percent in 2018. That percentage should go down further this year as Charter lowers cable capital costs and increases revenue.

Charter raised prices in November

Despite the expected decrease in costs, Charter raised prices throughout its 41-state cable territory in November. The price hikes affect both broadband and cable TV service and could amount to $91 extra per year for individual customers who buy both.

Charter said its cable revenue per residential customer was $111.78 a month in the fourth quarter, up 0.9 percent from the previous year. Charter said that "promotional rate step-ups and modest rate adjustments"—price increases, in other words—helped offset the fact that many customers purchase only Internet service and thus aren't paying for TV.

Further Reading

Charter told Ars in October that its new price hike "reflects the dramatically faster speeds and investments we've made in reliability and quality."

But the speed increases in 2018 were achieved without a major increase in capital spending. Charter's total capital spending for 2018 was $9.1 billion, including $242 million in costs for its new mobile service, up from $8.7 billion in 2017. Charter is a reseller of Verizon network capacity, so it isn't actually building its own mobile network. But it spent money on back-office systems and retail store upgrades in order to launch the mobile service in June 2018.

Capital spending rises and falls based on business needs and technology upgrade cycles, such as the DOCSIS 3.1 rollout mentioned by Charter. Despite Pai's statements that net neutrality rules lowered investment, Charter raised its capital investment in 2017 while the rules were in place.

As we reported last week, Comcast's cable division spent $7.95 billion on capital expenditures during calendar year 2017, but that fell to $7.72 billion in the 12 months ending on December 31, 2018.

Further Reading

Despite Charter raising speeds in its network, New York government officials say Charter hasn't met broadband expansion requirements that it agreed to in order to get the state's permission to buy Time Warner Cable. US Rep. Anthony Brindisi (D-N.Y.) this week asked the FCC "to hold Charter/Spectrum accountable."

Since the Charter/Time Warner Cable merger, "hundreds of my constituents have contacted me to share stories of exorbitant rate increases," Brindisi told Pai in a letter. "Some people who were paying just over $100 a month for cable and Internet service were paying about $200 a month for the same service just two years later. For working families and seniors living on a fixed income, these rate increases are unacceptable."

Charter's yearly revenue rose from $41.6 billion in 2017 to $43.6 billion in 2018. Net income decreased from $9.9 billion to $1.2 billion, but Charter said this drop "was primarily driven by a GAAP tax benefit from a reduction in the deferred tax liability as a result of Federal tax reform in 2017."

Charter is the only high-speed home broadband choice for 38 million Americans, making it difficult for Internet customers to switch in response to price increases, a recent study found. Some cable TV customers are dropping the service in favor of online streaming options, however. Charter's total video customer base dropped from 16.4 million at the end of 2017 to 16.1 million at the end of 2018, while its broadband subscriber base rose from 22.5 million to 23.6 million in the same 12-month period.

Promoted Comments

I'm in upstate NY and continued with Charter when they bought out TWC. Can say my most recent bill went up by about $20 this month and am seriously considering dropping it, unless the PSC actually stands up to their promise to kick them out. I only hope if that does happen, the spin-off will be required to stay independent for an indefinite time period so Comcast doesn't swoop in - that's my biggest fear.

As a Charter hostage in Los Angeles, they could cut a lot of costs by just cutting it out with the upsell mailers they send out. This shit is ridiculous, they use pretty high-quality paper stock for a lot of the mailers and I get them several times a month, even with volume discounts there's no way they're not dropping a pretty penny on constantly mailing these out to everyone.

Oh theeeeere's a surprise. I think I'm going to have a heart attack and die from that surprise.

Has anything Idjit Pai said about net neutrality come true yet? This guy either spends all his time being constantly astonished at the actions of ISPs, or he's still too busy counting his 'consulting fees' to notice.

I'm in upstate NY and continued with Charter when they bought out TWC. Can say my most recent bill went up by about $20 this month and am seriously considering dropping it, unless the PSC actually stands up to their promise to kick them out. I only hope if that does happen, the spin-off will be required to stay independent for an indefinite time period so Comcast doesn't swoop in - that's my biggest fear.

Oh theeeeere's a surprise. I think I'm going to have a heart attack and die from that surprise.

Has anything Idjit Pai said about net neutrality come true yet? This guy either spends all his time being constantly astonished at the actions of ISPs, or he's still too busy counting his 'consulting fees' to notice.

I'm just surprised ISPs didn't spend a year or two increasing capital improvements just to give credit to Ajit's comments and make it easier for him to defend what he did.

Oh theeeeere's a surprise. I think I'm going to have a heart attack and die from that surprise.

Has anything Idjit Pai said about net neutrality come true yet? This guy either spends all his time being constantly astonished at the actions of ISPs, or he's still too busy counting his 'consulting fees' to notice.

I'm just surprised ISPs didn't spend a year or two increasing capital improvements just to give credit to Ajit's comments and make it easier for him to defend what he did.

Not brazenly ignoring everything they said? Why bother, clearly reality has no impact on what people choose in their leadership. How do you think someone like Trump got elected? If the USA had any collective intelligence at all the republican party would already be dead and buried.

As a Charter hostage in Los Angeles, they could cut a lot of costs by just cutting it out with the upsell mailers they send out. This shit is ridiculous, they use pretty high-quality paper stock for a lot of the mailers and I get them several times a month, even with volume discounts there's no way they're not dropping a pretty penny on constantly mailing these out to everyone.

Keep getting these for them advertising their "mobile service", despite it being repackaged Verizon. Trouble is they're sometimes packaged in "important information about your account" envelopes so I have to open them in case they're not junk, but 99.9% of the time it's marketing garbage.

Oh theeeeere's a surprise. I think I'm going to have a heart attack and die from that surprise.

Has anything Idjit Pai said about net neutrality come true yet? This guy either spends all his time being constantly astonished at the actions of ISPs, or he's still too busy counting his 'consulting fees' to notice.

I'm just surprised ISPs didn't spend a year or two increasing capital improvements just to give credit to Ajit's comments and make it easier for him to defend what he did.

Not brazenly ignoring everything they said? Why bother, clearly reality has no impact on what people choose in their leadership. How do you think someone like Trump got elected? If the USA had any collective intelligence at all the republican party would already be dead and buried.

Oh theeeeere's a surprise. I think I'm going to have a heart attack and die from that surprise.

Has anything Idjit Pai said about net neutrality come true yet? This guy either spends all his time being constantly astonished at the actions of ISPs, or he's still too busy counting his 'consulting fees' to notice.

I'm just surprised ISPs didn't spend a year or two increasing capital improvements just to give credit to Ajit's comments and make it easier for him to defend what he did.

What else do you expect from companies that rely on quarterly revenue reporting to determine bonuses for the corporate heads?

As a Charter hostage in Los Angeles, they could cut a lot of costs by just cutting it out with the upsell mailers they send out. This shit is ridiculous, they use pretty high-quality paper stock for a lot of the mailers and I get them several times a month, even with volume discounts there's no way they're not dropping a pretty penny on constantly mailing these out to everyone.

Keep getting these for them advertising their "mobile service", despite it being repackaged Verizon. Trouble is they're sometimes packaged in "important information about your account" envelopes so I have to open them in case they're not junk, but 99.9% of the time it's marketing garbage.

Oh those 'important information' letters can fuck right off. I got one from DirectTV that was packaged the same way people send W-2s through the mail. That shit should be illegal.

Oh theeeeere's a surprise. I think I'm going to have a heart attack and die from that surprise.

Has anything Idjit Pai said about net neutrality come true yet? This guy either spends all his time being constantly astonished at the actions of ISPs, or he's still too busy counting his 'consulting fees' to notice.

I'm just surprised ISPs didn't spend a year or two increasing capital improvements just to give credit to Ajit's comments and make it easier for him to defend what he did.

I was also in the upstate NY TWC-Charter footprint. We had been paying about $60/mo for 20/5Mbps service before and after the merger. We recently moved inside the footprint of a small independent fiber ISP, and lo and behold, Charter's offering at my new address was $45/mo for 400/50Mbps.

It's absolutely shocking what competition can do!

I'm now paying about double that for gigabit service with a static IP, and I'm grateful to have the option to pay more not to do business with Charter.

Oh theeeeere's a surprise. I think I'm going to have a heart attack and die from that surprise.

Has anything Idjit Pai said about net neutrality come true yet? This guy either spends all his time being constantly astonished at the actions of ISPs, or he's still too busy counting his 'consulting fees' to notice.

I'm just surprised ISPs didn't spend a year or two increasing capital improvements just to give credit to Ajit's comments and make it easier for him to defend what he did.

Not brazenly ignoring everything they said? Why bother, clearly reality has no impact on what people choose in their leadership. How do you think someone like Trump got elected? If the USA had any collective intelligence at all the republican party would already be dead and buried.

As a Charter hostage in Los Angeles, they could cut a lot of costs by just cutting it out with the upsell mailers they send out. This shit is ridiculous, they use pretty high-quality paper stock for a lot of the mailers and I get them several times a month, even with volume discounts there's no way they're not dropping a pretty penny on constantly mailing these out to everyone.

Keep getting these for them advertising their "mobile service", despite it being repackaged Verizon. Trouble is they're sometimes packaged in "important information about your account" envelopes so I have to open them in case they're not junk, but 99.9% of the time it's marketing garbage.

Oh those 'important information' letters can fuck right off. I got one from DirectTV that was packaged the same way people send W-2s through the mail. That shit should be illegal.

What should be illegal is to sell 1Gb service with a 1TB data cap. Comcast keeps trying to push me into said service, and I keep telling them the same thing. There's no point in a 10x increase in bandwidth when the data cap is still there. I'm not paying an additional $50/mo on top of the 1Gb service pricing ($200/mo for special introductory pricing) to be able to really utilize that bandwidth. Here, the only tier with no cap is the outrageously priced 2Gb plan at $400/mo.

Please Elon, save us from this lack of competition. I sincerely hope that LEO satellite setup starts rolling out this year as planned. Because it's the only thing that will bring any competition for the majority of US Internet subscribers due to how municipalities have been so restricted from competition.

As a Charter hostage in Los Angeles, they could cut a lot of costs by just cutting it out with the upsell mailers they send out. This shit is ridiculous, they use pretty high-quality paper stock for a lot of the mailers and I get them several times a month, even with volume discounts there's no way they're not dropping a pretty penny on constantly mailing these out to everyone.

Comcast does the same. Sometimes they use full color plastic postcards. PLASTIC!

In Charter’s defense at least in my part of Michigan they've regularly doubled speeds and kept the price the same over the last 5 years. I can't speak for elsewhere though.

It's been similar in NYC as well. They took over Time Warner and it has been a vastly improved experience. As I mentioned in another thread I just got 400mbps for $40 including modem & router. That was at the same price I had previously been paying for 100mpbs (which they upgraded me from 50mpbs that I had with TWC at no price increase).

I have no complaints with them, but I'm in a building with Fios so that may explain it.

I see 2 root causes. Treating these companies as natural monopolies (like power or natural gas companies) which, since this results in lack of competition, requires the granting authority to decide pricing (which isn't happening like it does with public utilities) and the demand of a stockholder owned corporation, which pressures toward higher profit and dividend (as it should be). If we grant you a monopoly, we set the prices, otherwise, you share your poles and easements with anyone who wants to compete with you, which lets the market decide pricing.